Topics: COVID testing; economic performance; UK free trade deal




Laura Jayes: Joining me live now is the Finance Minister Simon Birmingham. Thanks so much for your time. First of all, you’re back in Adelaide. There’s a lot of testing that needs to go on in order for us to move around the country at the moment. What have you been through this morning?


Simon Birmingham: Hi Laura. Well, it’s good, it’s good to be with you, I have literally just had the lovely stick up the nose, which of course I’ve had many, many times and so have many other Australians. Look, it’s an important part overall of ensuring that that we can keep tabs on the spread of COVID because COVID is here and it’s here to stay. Importantly, are huge vaccination rates in this country, which are above New Zealand or the UK, Finland, Norway, so many other countries do provide us with huge levels of protection, but we do want to make sure that we can still contain the spread in ways that ensure our health systems are completely able to cope. They’re doing a fantastic job so far, and testing regimes are important part of that. So do urge people who need to for various reasons, and especially if you have any symptoms or have been in contact with others to make sure you follow through and get those tests. Sometimes you have to wait a little bit, but that’s the price we all pay for doing the right thing.


Laura Jayes: Well, we’re talking about four hour long queues. In some instances, if state governments are going to require more testing, they should be putting on more facilities, shouldn’t they?


Simon Birmingham: Well, I certainly urge the states to make testing as easily and available as they possibly can. Now I sort of have had a bit of a disjointed morning, having joined a queue quite early hoping to get it done early, and it was a bit slow moving at that stage. And then I joined the queue about an hour ago and I’ve got it done easily. So it’s obviously they have to try to juggle when they think demand will peak in terms of people trying to get it done. And I do appreciate as well, there are staff challenges in terms of the systems to deliver. We’re now running a booster programme that has seen more than one million Australians get booster doses. We’ve had a record day in terms of booster delivery, but that does mean that in terms of health care workers to administer vaccines, to undertake tests and to support those who need treatment across the system, there’s plenty of demand and plenty of pressure points, and that’s why we’ve invested so much in those state health systems in supporting them. But of course, there are finite limits to the number of people that can go around.


Laura Jayes: Okay, let’s talk money. You’re heading to a trillion dollars debt. How can you possibly go into this election arguing that you’re the better economic managers?


Simon Birmingham: Well, we’ll do that very clearly on the basis that Australia’s got a top three global economic performance in terms of growth over the last 12 months that the investments we have made have worked. They’ve worked in keeping Australians safe with a bottom three fatality rate amongst developed countries. They’ve worked in keeping Australians in jobs with that top three economic growth rate amongst developed nations, and we’ve now got 160,000 more jobs in place than we had pre-COVID-19. So the investments that we have made have worked. We are also one of only nine countries around the world to still have a AAA credit rating, and two of the ratings agencies in the last year have taken us off of their negative watch lists. And while that may seem counterintuitive when we’re running record peacetime deficits as a result of COVID 19, it is a reminder that compared with so much of the rest of the world, our debt position is much more manageable, and yesterday’s budget update showed that it’s improving in the 2020 budget, we were expected to have net debt peak at close to 44 per cent of GDP. It will now peak at around 37 per cent of GDP, which is a very significant improvement in terms of lower debt than had been expected.


Laura Jayes: Trillion dollars debt I mean, your predisposition still seems to be further tax cuts and no spending cuts. Is that right?


Simon Birmingham: Well, we certainly believe that the lower taxes we’ve delivered to date and the tax reform in terms of eliminating the 37 cents in the dollar income tax bracket and ensuring no Australian pays more than 95 cents in the dollar is a key part of our economic recovery plan. And if you look at yesterday’s budget update, even though we brought forward tax cuts and Australians are pocketing around $1.5 billion more a month than they would have under the old tax regimes, the amount of income tax revenue we receive is higher than we had forecast and expected. Why is that? Because economic growth is stronger. We’re getting that dividend from those lower taxes, driving investment, driving consumer and household confidence, driving business confidence and therefore providing higher revenue streams back into government. That’s what the plan was always intended to do, and it’s working very clearly.


Laura Jayes: Well your plan was also to be starting budget repair when unemployment is in the fours, they’re in the fours now, your own projections say they’ll stay that way and wages will slowly go up. So when will you start that budget repair?


Simon Birmingham: In part, Laura, it is underway, as we detailed in the budget papers earlier this year, the medium term fiscal strategy, the budget repair strategy there is to ensure that we reduce debt as a share of the size of the economy and that we do that essentially through two functions. One, of course, is growing the economy as strongly as possible. The other is by ensuring that we can slow spending and show restraint wherever possible. Now, as the figures I referenced earlier, that reduction in the expected peak of net debt does show that we are already successfully reducing debt as a share of the economy as what it’s expected to be and where it’s expected to peak from a previous projected peak of 44 per cent, down to closer to 37 per cent. That is that is a trajectory we want to continue to focus on by driving that economic growth. And yes, it does mean that with huge spending pressures in the NDIS in delivering aged care services and meeting our national security requirements, we absolutely have to prioritise spending into the future. And there’s certainly not scope for federal governments of the future to take on huge additional structural spending activities like the Labor Party is proposing in relation to childcare or TAFE.


Laura Jayes: Yet there’s $16 billion set aside in secret spending. What’s that for?


Simon Birmingham: That’s part of the broader contingency reserve now comprises a few different things some of it is in is in relation to commercially sensitive areas where figures can’t all be revealed. Other parts are decisions that we are carefully weighing as a government that we are likely to think we have to take as part of the ongoing economic recovery or meeting other priorities. Yesterday’s budget update did demonstrate we had to do additional things to achieve our net zero target to work towards the closing the gap targets to ensure the sustainability of the Pharmaceutical Benefits Scheme. Few Australians would argue with the importance of doing those things, but in terms of other aspects of the budget, what we’ve done is provide for sensible contingencies so that the budget projections we provided yesterday are ones that should carry through right into the next budget. Or if we can find ways to improve them further, then we will


Laura Jayes: See what happens to small government. Now you’re big spending, we’ve got big debt, big government still living in our lives. When is that going to reduce?


Simon Birmingham: Well, we certainly hope that we can keep seeing the reduction of government in our lives as we move into the next phases of managing COVID with such a heavily vaccinated population with more than one million Australians having got their booster doses already and urging people to keep following through on that so that we can keep the path of reopening. Reopening in states like New South Wales from lockdown and in Victoria, or reopening borders and coming to terms with managing and living with COVID in other states of the country. In terms of spending, it is absolutely the case that that we need, as I said before, to manage that very carefully and particularly the government, not to start to take on new additional structural spending pressures that run long into the future. There are more than enough that having come through this extraordinary period of COVID 19, where we have had to respond to a global pandemic, we have run the largest peacetime deficits in doing so. That’s not something we ever intended to do, but we demonstrated as a government that we weren’t ideological purists. We were willing to be pragmatic, step up and invest more in our health system, invest more in economic supports for Australians when and where it was absolutely necessary. But our intention is also very clearly to step that back as quickly as we can when we brought JobKeeper to an end. The Labor Party was saying we should extend it when we brought other income supports out of COVID 19 to an end. The Labor Party said we should extend them. We have taken the difficult decisions to stop those things where necessary and the dividend is there in the record jobs growth that we’ve seen yesterday, with 360,000 jobs coming back in one month alone.


Laura Jayes: Well, you’ve got a Victorian in Adelaide today and the Trade Minister, Dan Tehan, and that is for good reason. But you were the trade minister when you negotiated a lot of this EU-UK free trade deal. There are always winners and losers in these things. And are you willing to tell us where we may be losing?


Simon Birmingham: Or the ambition of these deals always is to grow the size of the pie overall in terms of two way trade between countries like Australia and the UK. I am so excited to see this deal signed. It provides big opportunities for our agricultural producers. Sheep and beef meat, dairy rice opportunities, especially for our wine industry. One in five bottles of wine sold in the UK are already Australian wine, and the elimination of tariffs there will give Australian wine makers a more competitive position relative to the Europeans who have had an advantage there. But opportunities in the services sector. Opportunities for those who compete for government procurement. And of course, more opportunities, particularly for young Australians to be able to work for longer in the UK with better work rights there. And I think this is just a sign as to how two countries that should be close and open, like Australia in the UK can achieve that when they work together in these types of trade deals.


Laura Jayes: Simon Birmingham will leave it there today and we won’t be torturing you for, well until next year. So have a great Christmas. Thanks for being available for AM agenda and we’ll see soon.


Simon Birmingham: Thanks so much, Laura, all the best to you, your family and all the viewers.